Reuters.- Annual inflation in Mexico accelerated above expectations in the first half of September and remained well above the central bank’s official target, encouraging expectations of a further increase in the benchmark interest rate next week.
The National Consumer Price Index (INPC) advanced 5.87% from the 5.60% registered in the second half of August, the National Institute of Statistics and Geography (Inegi) reported on Thursday.
Analysts consulted in a Reuters poll projected biweekly annual inflation to accelerate to 5.72%.
Lee: Year-on-year inflation would have accelerated in the first half of September: survey
Meanwhile, year-on-year core inflation grew at a rate of 4.92%, its highest level since November 2017 and higher than the 4.85% expected by the market.
The Bank of Mexico (Banxico) raised this month, in a split decision, the benchmark interest rate by 25 basis points, to place it at 4.50%, amid concerns about inflation expectations that far exceed the target.
The monetary authority estimated that it will be in the first quarter of 2023 when annual inflation converges to the official goal of 3% +/- one percentage point. Banxico’s next monetary policy decision will be next Thursday.
“The renewed increase in headline and core inflation in Mexico in the first two weeks of September (…) ensures that Banxico will continue its adjustment cycle at its meeting next week. But we still think it will move slowly, with another 25 bp rise to 4.75%, “Capital Economics said in a report.
Only in the first 15 days of September, consumer prices rose 0.42%, beating expectations of 0.28%, while the underlying index increased 0.31%.
The increase in inflation was driven by increases in the prices of some agricultural products, such as tomatoes and onions; domestic LP gas, regular gasoline and soft drinks, detailed the Inegi.
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